Causes of the Natural Resource Curse in Africa
Prof. Garb
183CW
Natural Resource Curse and Economic Growth
The Causes of Natural Resource Curse in Africa
The Natural Resource Curse, also known as the “Paradox of Plenty,” (Karl, 1997) implies that although some countries, such as those of sub-Saharan Africa, possess an abundance of natural resources, their economic performance is nonetheless poorer than those countries with fewer resources. The nature of the paradox is lucid: natural resources should be a means by which developing countries become viable, as opposed to being a detriment or impediment to such development. The specific problems that arise from this paradox can take various forms, such as “poverty, corruption, dictatorship and war” (Basedau and Lay, 2005, p. 9), which obviously possess devastating social effects on the citizenry of these countries.
Clearly, in cases such as sub-Saharan Africa not enough is being done to use natural resources efficiently in order to increase economic growth. That some countries with abundant natural resources do not suffer from the natural resource curse, for instance, Norway, Canada, and China, suggests that the most important reason for this difference is good governance. For example, during the1990s, the GDP of African countries dropped 1.15 percent a year, meaning that GDP declined 11% over the decade (Ross 2001, p, 20). Accordingly, the discrepancy in growth between countries that possess natural resources indicates that the crucial problem lies with the managing of such resources. In the following essay, I will discuss the key factors behind the so-called natural resource curse.
There are two phenomena that are related to the natural resource curse which I will seek to explain, examining them with more detail later in the text. The first is that of rent seeking. Rent seeking implies that some individuals or government sectors seek to maximize their own profit without making productive activities or producing output (Fischer, 2006). For
183CW
Natural Resource Curse and Economic Growth
The Causes of Natural Resource Curse in Africa
The Natural Resource Curse, also known as the “Paradox of Plenty,” (Karl, 1997) implies that although some countries, such as those of sub-Saharan Africa, possess an abundance of natural resources, their economic performance is nonetheless poorer than those countries with fewer resources. The nature of the paradox is lucid: natural resources should be a means by which developing countries become viable, as opposed to being a detriment or impediment to such development. The specific problems that arise from this paradox can take various forms, such as “poverty, corruption, dictatorship and war” (Basedau and Lay, 2005, p. 9), which obviously possess devastating social effects on the citizenry of these countries.
Clearly, in cases such as sub-Saharan Africa not enough is being done to use natural resources efficiently in order to increase economic growth. That some countries with abundant natural resources do not suffer from the natural resource curse, for instance, Norway, Canada, and China, suggests that the most important reason for this difference is good governance. For example, during the1990s, the GDP of African countries dropped 1.15 percent a year, meaning that GDP declined 11% over the decade (Ross 2001, p, 20). Accordingly, the discrepancy in growth between countries that possess natural resources indicates that the crucial problem lies with the managing of such resources. In the following essay, I will discuss the key factors behind the so-called natural resource curse.
There are two phenomena that are related to the natural resource curse which I will seek to explain, examining them with more detail later in the text. The first is that of rent seeking. Rent seeking implies that some individuals or government sectors seek to maximize their own profit without making productive activities or producing output (Fischer, 2006). For
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